Facebook is being investigated by the German federal cartel office, the Bundeskartellamt, for suspected anti-competitive behaviour stemming from breaches of data protection law.

The Bundeskartellamt said on Wednesday that it has initiated proceedings against the social network, which operates within Europe from a base in Ireland.

The Bundeskartellamt president Andreas Mundt said: “For advertising-financed internet services such as Facebook, user data are hugely important. For this reason it is essential to also examine under the aspect of abuse of market power whether the consumers are sufficiently informed about the type and extent of data collected.”

The watchdog will probe whether Facebook’s terms of service, which permit the use of user data for ad-tracking, are an abuse of Germany’s data protection laws and of its dominant position within the social network market.

Dominant companies are subject to special obligations.

Andreas Mundt, Bundeskartellamt president

Facebook makes money from targeted advertising to its 1.6 billion monthly users, using the data that it gathers from profiles, friends, postings, activities and opinions. It has faced strong criticism from German politicians and regulators over its privacy practices.

Mundt said: “Dominant companies are subject to special obligations. These include the use of adequate terms of service as far as these are relevant to the market.”

The Bundeskartellamt said that in order to access the social network, users must first agree to Facebook’s collection and use of their data by accepting the terms of service but that it was difficult for users to understand and assess the scope of the agreement.

The probe is to be conducted “in close contact with the competent data protection officers, consumer protection associations as well as the European Commission and the competition authorities of the other EU member states”, according to the watchdog.

A European Commission spokesperson said: “It cannot be excluded that a behaviour that violates data protection rules could also be relevant when investigating a possible violation of EU competition rules.”

Mark Watts, head of data protection at London-based law firm Bristows, described the case as “unusual” and said that the investigation marks the first time that data protection issues have become a significant factor in a competition case.